Environmental Law Handbook: Enforcement & Liability PDF

Chapter 2 Enforcement and Liability Kevin A. Ewing and Jason B. Hutt1 Bracewell & Giuliani LLP...

Chapter 2 Enforcement and Liability Kevin A. Ewing and Jason B. Hutt1 Bracewell & Giuliani LLP 1.0 Introduction The preceding chapter offered an essential overview of what environmental law is and how it is structured, and the chapters that follow each address a specific federal statute (or, in the case of the final chapter, a specific international standard for environmental management). Our task in this chapter is to focus on the enforcement of the environmental laws generally, with specific references to particular statutes to illustrate the general principles and problems of enforcement. We approach our task with an overview of federal enforcement trends, in order to give scale to our subject. We then introduce the governing precepts, purposes, and methods of enforcement and liability in our federalized system of environmental law. Next we turn to civil enforcement specifically, analyzing the features that distinguish it from criminal enforcement and providing a guide to the major issues involved in initiating and pursuing civil enforcement by the government and by private parties. A similar analysis of criminal enforcement follows. Having described in some detail how civil and criminal enforcement arises, and what its consequences may be, we then offer some observations about how the regulated community can manage its affairs to avoid or mitigate the risk of environmental enforcement and liability. Thereafter, we review some of the more recent trends in enforcement and liability, such as enforcement by non-environmental agencies and new efforts to “score” the environmental performance of individual entities and to record the score in publicly available databases. Finally, we offer a scattershot of big-picture observations about the nature and direction of environmental enforcement. Copyright © 2011. Government Institutes. All rights reserved. 2.0 Enforcement Trends The landscape of environmental enforcement is continuously changing. New laws passed by Congress, new regulations promulgated by EPA, judicial decisions, and changes in presidential administrations, among other factors, shift the intensity and focus of federal enforcement programs from year to year. Each presidential administration brings unique priorities to the foreground, implemented by handpicked senior officials at EPA and, indirectly, through the appointment of federal judges. The Bush administration focused its enforcement philosophy on compliance assistance for Steinway, D. M., Ewing, K. A., Case, D. R., Nardi, K. J., & Brownell, W. F. (2011). Environmental law handbook. Government Institutes. Created from erau on 2024-12-11 03:43:29.  the regulated community, reducing the amount of pollutants, and mandating environmental cleanup projects. The Bush administration was criticized by nongovernmental groups that 2 claim EPA softened the enforcement of environmental laws in recent years. The Environmental Integrity Project, for example, released a study in 2007 that documented a general steep decline in the number of enforcement actions when comparing the first five years of the Bush administration to the last five years of the Clinton administration. 3 Under the Obama administration, the number of environmental cases referred to the Department of Justice (DOJ) has not swelled. However, a distinctly different set of priorities and tactics is emerging. EPA’s 2011–2015 Strategic Plan enumerates five goals, one of which is achieving effective and consistent enforcement of environmental laws. To carry out this 4 goal, EPA has indicated it will be taking a targeted approach focused on “the most serious water, air and chemical hazards.” 5 EPA’s enforcement efforts over the next several years will cross all types of media. For 6 example, EPA has indicated an intent to pursue settlements that require greenhouse gas (GHG) emission reductions, focus on compliance with the new mandatory GHG reporting requirements, and increase the number of enforcement actions brought relating to waters that do not meet water quality standards. Additional water-related goals that EPA intends to enforce 7 vigorously include reducing the amount of raw sewage in water, decreasing water pollution caused by animal waste, and reducing stormwater runoff. The agency also intends to be more 8 aggressive in ensuring that contaminated sites are cleaned up and that enforcement increases with respect to toxic chemicals and pesticides. Overall, particular focus will be placed on 9 “violators with significant repeat or chronic noncompliance or prior criminal conviction.” 10 EPA’s Office of Enforcement Compliance and Assurance (OECA) is tasked with carrying out these goals. OECA spearheads the agency’s environmental compliance and enforcement activities and sets multiyear national priorities for environmental enforcement. Otherwise referred to as the “National Enforcement and Compliance Assurance Priorities” (NECAP), the multiyear national priorities are set by OECA taking into consideration patterns of noncompliance as well as areas where enforcement could lead to significant environmental benefits or a reduction in the risk to human health or the environment. Through the NECAP, 11 OECA characterizes the problems in the world of environmental enforcement and establishes goals for addressing those problems. When OECA accomplishes its goals, a priority Copyright © 2011. Government Institutes. All rights reserved. enforcement area may be dropped from the next NECAP. For example, OECA notes that the “Petroleum Refining” priority listed in the fiscal years (FY) 2005–2007 NECAP was not included as a priority in the NECAP for FY 2008–2010 because OECA achieved its goal of addressing 80 percent of the national refining capacity. 12 The NECAP offers insight into EPA’s strategic plan for future enforcement, and there is often a strong correlation between problems that are designated national priorities and the pollutant reductions and injunctive relief achieved. Looking forward, OECA has laid out its list of 13 priority enforcement areas for FY 2011–2013. The national enforcement priorities identified 14 by OECA for 2011, 2012, and 2013 emphasize keeping raw sewage and contaminated Steinway, D. M., Ewing, K. A., Case, D. R., Nardi, K. J., & Brownell, W. F. (2011). Environmental law handbook. Government Institutes. Created from erau on 2024-12-11 03:43:29.  stormwater out of federal waters, reducing contamination from animal waste, reducing air pollution that affects communities’ health, reducing air pollution from large sources such as coal-fired utilities and the cement, glass, and acid sectors, and ensuring that the energy extraction sector complies with environmental laws. 15 In addition to setting national enforcement priorities, on a yearly basis OECA provides a statistical analysis of the expenses incurred to investigate, defend, and settle the cases that are brought. OECA’s yearly report also lays out the number of civil and criminal cases EPA refers to the Department of Justice on an annual basis. In FY09 EPA referred 277 civil cases while charging 200 criminal defendants. According to OECA, in FY09, administrative civil and 16 criminal penalties totaled more than $208.7 million, not to mention $5.3 billion in remedies such as injunctive relief and supplemental environmental projects (SEPs). In FY08, the EPA’s 17 civil and criminal enforcement required polluters to spend $800 million more than in the previous year on pollution controls, cleanup, and environmentally beneficial projects, while 18 over the same period of time civil judicial referrals remained relatively constant. 19 The numbers provided by OECA are presented, as one might expect, with public relations in mind: they help establish or support executive branch claims of being tough on crime, being strict about environmental performance, being innovative, or whatever the latest political wisdom may be. In addition, OECA may report enforcement statistics in a specific way to serve as a deterrent to polluters fearing steep penalties. In response to a Government Accountability Office (GAO) report criticizing OECA’s statistics reporting, Grant Nakayama, assistant EPA administrator for OECA under the Bush administration, stated in 2008 that the agency may decide to report on penalties assessed versus the penalties actually collected because it creates a “general deterrent effect.” 20 EPA is not alone in adopting this strategy. Over the past several years, DOJ has also used press releases to take a hard stance when proposing criminal fines for environmental violations. For instance, in 2007, DOJ took a hard-line position regarding the possible penalties that might be imposed on CITGO Refining and Chemical Co. after the company was found guilty of committing violations of the Migratory Bird Treaty Act. CITGO had failed to install roofs on two tanks at its Corpus Christi Refinery, and a press release issued by DOJ indicated that CITGO could face a penalty ranging anywhere from $500,000 to two times the profit obtained through the company’s illegal action. Sentencing has still not occurred, but 21 Copyright © 2011. Government Institutes. All rights reserved. depending on how DOJ characterizes CITGO’s derived economic benefit, the proposed penalty could conceivably reach very large sums. Regardless of whether it is for public relations reasons or to create a deterrent effect, year- to-year and report-to-report comparisons are often difficult to make because the enforcement data are presented in different formats. Variations in the presentation of enforcement data are also likely driven by the goals EPA outlines for a particular period, so that OECA can best demonstrate its fulfillment of those goals. To further complicate matters, in 2005 EPA’s inspector general found that EPA is unable to effectively track compliance with federal environmental law. As a result, the inspector 22 Steinway, D. M., Ewing, K. A., Case, D. R., Nardi, K. J., & Brownell, W. F. (2011). Environmental law handbook. Government Institutes. Created from erau on 2024-12-11 03:43:29.  general recommended that EPA improve its enforcement and compliance performance measures, notably through the design and implementation of a pilot program to track compliance. A 2006 study by the GAO indicated that EPA’s regions “vary substantially in the actions they take to enforce environmental requirements.” As an example, the GAO noted that some regions followed EPA’s policy to require states to report all significant violators of environmental law, while other regions did not. 23 In early 2008, EPA faced numerous inquiries from Congress, EPA’s inspector general, and the GAO regarding what was described as “creative accounting practices” associated with its enforcement action reporting and statistics. Critics of the Bush administration’s environmental 24 policy claimed that the EPA adopted the creative accounting in order to cover up for a significant decrease in enforcement actions. After conducting a performance audit, the GAO 25 released a report that indicated a series of inaccuracies in EPA’s method for calculating and reporting enforcement penalties. In its report, the GAO indicated that EPA overstated the impact of the enforcement program by reporting “penalties assessed” instead of the actual penalties collected; reduced the precision of trend analyses, which resulted in the understatement of past EPA accomplishments; and understated the influence of its enforcement programs by excluding penalties awarded to the states. The GAO also found that although the 26 value of injunctive relief increased from $4.4 billion in FY99 to $10.9 billion in FY07, the total penalties assessed by EPA declined by approximately 43 percent between 1998 and 2007. EPA generally agreed with the GAO’s findings contained in the report; however, the agency stood by its reporting of penalties assessed as a deterrent factor and indicated that it is difficult to accurately report some penalties because they are collected by EPA offices other than OECA, and in some cases by the DOJ. 27 As a result, deciphering enforcement and compliance trends requires a bit of speculation. Bearing that in mind, set out below are a few observations. Please note, however, that these observations are based solely on the numbers reported by OECA and others, without potentially important insights into how the underlying statistics were compiled. Moreover, the observations do not reflect other enforcement mechanisms touched on in this chapter, such as enforcement by state environmental agencies, citizen suits, toxic tort litigation, and natural resource damage recovery. To the extent enforcement trends are used to guide how a compliance program is designed or how environmental risk is managed, these other Copyright © 2011. Government Institutes. All rights reserved. mechanisms should be accounted for. 2.1 Remedy Preferences Changes in enforcement are also driven by the evolution of regulatory philosophies. The “command-and-control” approach forged in the 1970s and premised on fines and penalties has yielded somewhat to market-driven schemes like “cap-and-trade” and reliance on compliance incentives like voluntary audit disclosures and environmental management systems. EPA reported a significant increase in the value of the injunctive relief it obtained between 1999 and 2008 as the estimated value of injunctive relief increased from $4.4 billion in FY99 to $11.7 billion in FY09. However, in 2009, this number significantly declined to $5.3 28 Steinway, D. M., Ewing, K. A., Case, D. R., Nardi, K. J., & Brownell, W. F. (2011). Environmental law handbook. Government Institutes. Created from erau on 2024-12-11 03:43:29.  billion. The reason for this step change downward is unknown at this time, but the basis for 29 the change could be as simple as a change in the way that injunctive relief is calculated. Gauging the true value of injunctive relief and SEP remedies is different from the “bean counting” involved in tracking how many penalty dollars EPA receives in a given year. According to OECA, the injunctive relief numbers include efforts to “correct violations and take additional steps to protect the environment.” This rather vague description is believed to 30 include actions compelling compliance with law (i.e., the costs to take actions that might otherwise already be required). The compelled action also may be on a faster timetable or be required to meet more stringent standards, thus costing more to implement under direction from EPA. However, the compliance component and any additional components are not meaningfully differentiated in OECA’s reports. Separately, injunctions may be liability-related (not compliance-related). For example, CERCLA Section 106 orders may effectively impose liability on a party by ordering them to respond to a release, without a meaningful right of appeal or contest. Like compliance-related injunctions, a portion of the value “recovered” by 31 the public in a liability-related injunction includes expenditures that the liable party would already have been on the hook for. SEPs are essentially leveraged investments that the defendant in an enforcement action can voluntarily choose to perform in lieu of paying a portion of the penalties owed. Expenditures for the SEP are a multiple of the penalty amount, not dollar-for-dollar. Companies accept or reject SEPs based on many factors, including public relations, the amount of the assessed penalty versus SEC disclosure thresholds, bank relationships, tax consequences, and perceived negotiation value. EPA encourages SEPs in many cases because investment is typically geared toward the environmental community that suffered harm pursuant to the violation, and SEPs often take a practical, tangible form. SEPs also provide a larger raw number for EPA to publicize than what the agency might have obtained from a pure penalty. 2.2 Statute-by-Statute Enforcement It is also instructive to note the level of enforcement under each federal statute. The fact that the Clean Water Act is near the top of the charts for enforcement dollars, while the Emergency Planning and Community Right-to-Know Act is toward the bottom, will come as no surprise. What is more interesting is how EPA uses different mechanisms to enforce different statutes and the results obtained from the different methods. For example, the Clean Air Act and the Copyright © 2011. Government Institutes. All rights reserved. Clean Water Act typically yield a high dollar value from civil penalties, while the dollar amount of administrative penalties is far less significant. A statute like TSCA, however, will 32 yield the vast majority of its penalties in the administrative forum, while civil penalties are almost nonexistent. The largest numbers, however, often come from the estimated value of 33 injunctive relief. In comparing enforcement between statutes, keep in mind that the settlement 34 of major enforcement cases from one year to the next can skew the analysis. For example, in OECA’s FY04 report, EPA reports that companies spent close to $4.8 billion on environmental cleanup in 2004 as a result of enforcement actions brought by EPA. Critics point out that $3.2 billion can be attributed to the settlement of two cases under the Clean Water Act and the Clean Steinway, D. M., Ewing, K. A., Case, D. R., Nardi, K. J., & Brownell, W. F. (2011). Environmental law handbook. Government Institutes. Created from erau on 2024-12-11 03:43:29.  Air Act. 35 2.3 The Corporate Environmental Endangerment Initiative In 2005, the DOJ Environmental Crimes Section began a new initiative, working jointly with the EPA and the Occupational Safety and Health Administration (OSHA) to investigate and prosecute companies that violate EPA and OSHA laws. This initiative, commonly known as 36 the Worker Endangerment Initiative (WEI), was adopted to address the simple fact that environmental compliance violations will often place workers’ health and safety at risk. The WEI focuses on DOJ prosecutors working side-by-side with inspectors from EPA and OSHA, which enhances the enforcement capabilities of all three agencies. One important component of the WEI is to train OSHA inspectors to identify potential environmental violations. The WEI has therefore expanded EPA’s investigative resources as OSHA investigators are now capable of recognizing potential environmental compliance situations during their own health and safety inspections. The federal government sees the following benefits from the WEI: (1) an increase in the ability to inspect facilities, since OSHA fields more inspectors than EPA; (2) empowering OSHA with the force of the statutory penalties available to EPA, which are more punitive than those available to OSHA; and (3) enabling DOJ to file complaints that integrate environmental violations with health and safety violations. The WEI appears to have met with some success as there have been several prosecutions of large companies over the past few years that can be credited to the collaborative investigation efforts of the three agencies. The most notable of the prosecutions is that of McWane, a company involved in the manufacturing of pipes, fittings, and valves. The McWane investigation began in 2003, which David M. Uhlmann, former chief of the DOJ’s Environmental Crimes Section, considers the WEI’s “pilot project.” The cooperative 37 investigations of McWane revealed a series of violations of both environmental and health and safety laws at certain McWane facilities. McWane eventually plead guilty to criminal charges 38 under the Occupational Safety and Health Act and the Clean Air Act, resulting in millions of 39 40 dollars in penalties. As the McWane investigation demonstrates, just because a company faces criminal charges for OSHA violations does not mean that EPA will refrain from bringing separate charges asserting a knowing violation of the Clean Air Act. More recently, EPA alleged that BP violated Section 112(r) of the Clean Air Act when the 2005 Texas City refinery accident occurred because the company failed to maintain a safe work environment. BP 41 Copyright © 2011. Government Institutes. All rights reserved. eventually paid a $15 million penalty for this violation, in addition to a $50 million OSHA 42 penalty, plus $500 million in capital expenditures to improve the refinery. 43 As can be imagined, the bad press associated with a national investigation of a company’s violation of both environmental and worker safety laws can be as difficult to deal with as the monetary penalties. It seems likely that the future will see more enforcement via this multi- 44 agency approach. 3.0 General Concepts of Enforcement and Liability A cardinal component of the environmental regulatory system in the United States is the Steinway, D. M., Ewing, K. A., Case, D. R., Nardi, K. J., & Brownell, W. F. (2011). Environmental law handbook. Government Institutes. Created from erau on 2024-12-11 03:43:29.  enforcement mechanism. The enforcement mechanism must reflect the broad nature and scope of the regulated activities, the potential impact of violations of environmental law on health and the environment, and the limited resources of the regulatory agencies. The goal is an integrated set of regulatory requirements and enforcement vehicles designed to maximize enforcement impact at reasonable effort and cost. This section discusses selected concepts of enforcement and liability that are somewhat peculiar to the environmental regulatory system. The section focuses, in turn, on the purposes of enforcement activity, the applicable law that may give rise to enforcement exposure, the mechanisms available to the government to identify violations, the remedies available under environmental law, and the agencies that may act on the violations. By any measure, the enforcement exposure under environmental law is broad, the enforcement reach is wide- ranging, and the impact on a person or entity can be significant. The system works effectively, if at times not efficiently. 3.1 Enforcement Purposes Environmental laws and regulations are designed to protect human health and the environment. Thus, the level of air emissions that may be allowed in a particular situation, or 45 the water discharges that may be permitted from a discrete facility, for example, ideally would be those that are not expected to undermine ambient air or water quality standards. Conversely, violation of the allowable or permitted limits could have an adverse effect on health and the environment. The primary purpose of enforcement actions under environmental law is to prevent or minimize adverse impacts from violations on health and the environment, and to assure a prompt return to compliance. 46 A secondary purpose of enforcement activity is to deter further violations by the alleged wrongdoer and by others. Environmental law typically includes a substantial penalty 47 component that is applied over and above the costs that may need to be spent to return the regulated activity to compliance promptly. To further ensure that the violator does not benefit 48 economically from the noncompliant activity, sanctions under environmental law normally include recovery of some or all of the economic benefit that the violator may have enjoyed by operating in violation of applicable requirements. This economic-benefit component may well 49 exceed the amount of a penalty. Copyright © 2011. Government Institutes. All rights reserved. To encourage others to maintain compliance, and to alert them to the significant risks of noncompliance, regulatory agencies regularly publicize enforcement actions, including details of the alleged violations, the activities and costs required to return to compliance, and the applicable sanctions. At both the federal and state levels, agencies routinely publish news releases that are easily accessible through agency websites. At least at the federal level, the 50 EPA also publishes information on enforcement accomplishments on an annual basis. 51 3.2 Applicable Law The basic foundations of enforcement exposure are the legal requirements themselves. In the context of environmental law, the operative requirements may arise from a multitude of Steinway, D. M., Ewing, K. A., Case, D. R., Nardi, K. J., & Brownell, W. F. (2011). Environmental law handbook. Government Institutes. Created from erau on 2024-12-11 03:43:29.  sources. Apart from understanding the law, identifying all relevant sources of applicable law may present a challenge in itself. Requirements may arise from self-implementing prohibitions in federal and state statutes and regulations; from limitations and conditions in permits, licenses, or other construction or operating authorizations issued by federal or state agencies; and from the terms of administrative orders or judicial decrees entered at the federal or state levels, by consent or otherwise. In addition, while in certain situations a federally-approved state requirement may take the place of federal law, both federal and state requirements may, and typically do, apply to a particular activity. Depending on the location of the regulated activity, municipal or other local ordinances also may apply. Environmental requirements often are comprehensive and complex, and they are normally adopted after public notice and comment pursuant to the federal Administrative Procedure Act 52 or the corresponding state statute. Agency descriptions and explanations of the meaning and scope of a proposed or promulgated rule are published in the Federal Register or a similar state publication and often are critical components of compliance activity and, necessarily, enforcement exposure. Likewise, federal and state agencies publish policies and directives 53 that may narrow or expand the scope of environmental requirements or otherwise explain the agency’s probable response and approach to specific types of violations, and the corresponding assessment of penalties. In brief, the law applicable to a regulated activity may 54 not be found simply in the relevant statute or regulations; other components of environmental law are likely to affect the agency’s enforcement discretion and the regulated party’s enforcement exposure. 3.3 Compliance Monitoring An essential prerequisite to enforcement activity is the agency’s discovery of apparent violations. Another key piece of the enforcement framework deals with the mechanisms available to the agency to monitor compliance and identify violations. The agencies certainly enjoy the statutory right to enter and inspect regulated facilities, and to request, even from the probable violator itself, information that may identify a violation. Because agency resources 55 are limited, however, enforcement activity under environmental law depends in large measure upon a system of self-monitoring and self-reporting. Copyright © 2011. Government Institutes. All rights reserved. Regulated entities are required to monitor specific activities on a periodic basis and to record and/or report the results of the monitoring to the relevant government authority. The 56 scope and frequency of the required monitoring and reporting varies from program to program, and from state to state. Because the self-monitoring cannot be continuous, though, any periodic monitoring needs to be representative of the monitored activity, and the reported information must be accurate (thus, one may not cherry-pick the moment to take a sample with an eye on assuring compliance). The reporting method also normally requires an affirmative statement by a responsible individual at the regulated entity to the effect that the information submitted is true, accurate, and complete. Certain programs also require a certification of compliance. 57 58 Steinway, D. M., Ewing, K. A., Case, D. R., Nardi, K. J., & Brownell, W. F. (2011). Environmental law handbook. Government Institutes. Created from erau on 2024-12-11 03:43:29.  The monitoring reports provide the agency ready access to compliance data. The certifications of accuracy, or of compliance, also essentially operate as admissions of violations that may be evident from reported data, and they make the defense of an alleged violation difficult without challenging the regulated entity’s own reports. 3.4 Enforcement Remedies Agency enforcement remedies include both civil and criminal actions. The criminal component carries significant sanctions, and the criminal provisions in the environmental statutes capture much more than just the typical criminal conduct. Even so, the civil component is widely regarded as a more realistic threat to the average party involved with regulated activities. While a regulated party will rarely if ever be subjected to a criminal action, it can almost be assured of a civil enforcement proceeding, at some level, at some point. Criminal provisions in environmental law challenge traditional notions of criminal conduct. Criminal activity in other contexts typically involves only intentional or deliberate acts. In the environmental context, however, “willful” and “reckless” violations may be prosecuted under criminal provisions, but “negligent” and “knowing” violations may be considered criminal actions as well. In addition, while the government must establish guilt “beyond a reasonable 59 doubt,” as in normal criminal cases, it has been effective in developing some options as to its burden of proof on some elements of the criminal activity. For example, a person may be convicted simply with a showing of general (and not specific) intent to violate the law. A 60 person also may be held criminally responsible for his own conduct, and for that of others under his supervision. The requisite “knowledge” of the violation may be knowledge imputed 61 to the individual, and does not have to be actual knowledge. 62 Most regulated entities operate as good corporate citizens, develop and implement environmental compliance programs, and always intend to comply with applicable law. Even so, violations do occur from time to time, and civil enforcement follows. In the civil context, the government’s path to applying sanctions can be relatively simple. Decisions to initiate enforcement action, especially informal administrative action, usually are delegated to low levels at the agency, and, in the first instance, the sanction may be imposed by the enforcement arm of the agency alone. Review by an independent trier of fact, such as an administrative law judge, may occur only upon specific request by the affected entity. Even at 63 Copyright © 2011. Government Institutes. All rights reserved. that level, the government does not need to show intent to violate the law, but only show, by a preponderance of the evidence, that the violation occurred. 64 3.5 Enforcement Authority The structure of the environmental regulatory system significantly affects the scope of enforcement authority and, necessarily, the enforcement exposure to the regulated community. Major environmental programs typically provide for the states to adopt their own regulatory programs. The state program can then take the place of the federal program, by delegation of 65 the federal regulatory authority, if it is at least as stringent as the federal program. If a 66 program is adopted at the state level, but not approved at the federal level, both programs Steinway, D. M., Ewing, K. A., Case, D. R., Nardi, K. J., & Brownell, W. F. (2011). Environmental law handbook. Government Institutes. Created from erau on 2024-12-11 03:43:29.  would apply, subject to prevailing laws of federal preemption. If a state program is approved at the federal level, it takes the place of the federal program and the state is given primary enforcement authority, subject to federal oversight. 67 The net result is that federal enforcement may occur in either situation, and generally may occur whether or not the state has taken some enforcement action. For example, in United 68 States v. Smithfield Foods, Inc., the owner and operator of two pork-processing plants argued that EPA’s civil enforcement action was precluded by a preexisting settlement with the state of Virginia. The Court of Appeals for the Fourth Circuit concurred with the lower court’s finding that Virginia’s enforcement scheme was not “sufficiently comparable” to EPA’s Clean Water Act authority to bar EPA from bringing its own “independent penalty action.” In practice, 69 federal enforcement is not expected to occur in reference to a delegated program unless the federal agency determines that the state agency has not taken adequate or sufficient action to meet the enforcement goals of the federal program. 4.0 Civil Enforcement and Liability 4.1 Introduction In this section we review the important civil aspects of enforcement and liability under federal environmental law. We start with a grounding in the statutory standards of liability and 70 defense. We turn then to agreed-upon (as opposed to legislated or promulgated) principles of liability and enforcement, such as permits and consent orders. Next we summarize EPA’s executive policies and practices with regard to civil enforcement, and we conclude by sketching the trajectory of a civil enforcement proceeding from beginning to end, noting the various roles of the participants. At the outset we can usefully distinguish between principles of enforcement and liability that derive from unilateral acts of the legislature (i.e., statutes), on the one hand, and principles that are mutually agreed with the government (like permits and consent orders), on the other hand. Both sources of law establish binding legal responsibilities and set consequences for failing to carry out these responsibilities, but the agreed documents have special attributes that tailor them to a particular entity in a manner that the legislature cannot duplicate without skirting the constitutional prohibition against bills of attainder. We consider each separately. Copyright © 2011. Government Institutes. All rights reserved. 4.2 Statute-Specific Principles of Liability and Defense Statutory standards are the backbone of modern environmental law. Unlike traditional—and still valid—principles of common law, statutes reflect the deliberate will of the legislature to govern the conduct of the regulated community for the benefit of human health and the environment. The federal environmental statutes vary considerably in the clarity of their exposition and the level of technical detail that is left to the discretion of the implementing agency (EPA, in most instances). In part the variation reflects the evolution in environmental policy between the earliest statutes and the latecomers, and in part it reflects specific enforcement needs that became evident with experience. No one who reads the Clean Air Act Steinway, D. M., Ewing, K. A., Case, D. R., Nardi, K. J., & Brownell, W. F. (2011). Environmental law handbook. Government Institutes. Created from erau on 2024-12-11 03:43:29.  in all its chaotic detail can fail to marvel at the simple directness of the Clean Water Act. 71 Despite their variation, statutes share several important features, two worth noting here. First, they set the outer parameters of responsibility and, to a greater or lesser degree, leave it to the executive branch to stimulate and enforce the responsibility within those parameters. For example, the Clean Water Act prohibits the discharge of pollutants to navigable waters from a point source absent a permit, but the regulatory scheme by which the permit is to be applied for and granted is left largely to the executive agencies. Second, and for present purposes more important, the environmental statutes lay the basic groundwork for enforcement by stating the elements of legal responsibility. The detailed blueprint for enforcement in the event of dereliction, however, is left to the executive branch. 4.3 Statutory Standard of Conduct Civil enforcement of the environmental laws is not limited to circumstances where the legal transgression was intended. By and large, the civil liability provisions contained in federal statutory environmental laws are “strict liability” provisions that disregard the intention and motive of the entity charged with a duty to comply. This means, in essence, that if a party does 72 not follow the requirements of a statute (e.g., fails to file an import certification as required under TSCA) the administrator of EPA may bring an enforcement action against that party based solely on its failure to obey the requirements of the statute, regardless of the reason for the failure and regardless of the entity’s good intentions to comply. There is generally no requirement that the party have a certain level of knowledge or intent in order for a violation to exist. Thus, under most federal statutory environmental laws, one only need act or fail to act 73 in a way prohibited by the statute in order to be exposed to potential civil enforcement and liability. 4.4 Statutory Defenses While most federal statutory environmental laws share a “strict liability” approach, the statutes vary in the specific defenses that they recognize. For example, the Clean Water Act prohibits the discharge of pollutants from a point source to waters of the United States unless the discharge is done in compliance with a permit issued by EPA or a state with authority delegated from EPA. Violation of the permit constitutes an enforceable violation of the act. In 74 75 certain circumstances, however, the permittee may assert a defense that excuses the violation. Copyright © 2011. Government Institutes. All rights reserved. The Clean Water Act provides that “an upset constitutes an affirmative defense to an action brought for noncompliance.” Upset means “an exceptional incident in which there is an 76 unintentional and temporary noncompliance with technology based permit effluent limitations because of factors beyond the reasonable control of the permittee.” If a facility experiences 77 this type of event, it can, subject to certain conditions, assert the “upset” defense. Likewise, 78 the statute excuses noncompliance in the event of “bypass,” provided certain circumstances are present. A bypass is an “intentional diversion of waste streams from any portion of a treatment facility.” Under the Clean Water Act, a facility may cause its wastewater stream to bypass the 79 treatment process if: (1) the bypass was unavoidable to prevent loss of life, personal injury, or Steinway, D. M., Ewing, K. A., Case, D. R., Nardi, K. J., & Brownell, W. F. (2011). Environmental law handbook. Government Institutes. Created from erau on 2024-12-11 03:43:29.  severe property damage; (2) there were no feasible alternatives to bypass; and (3) proper notice was given. 80 A facility may also avoid liability under the Clean Water Act by asserting the so-called “permit shield.” If a facility is in compliance with its discharge permit (federal or state- 81 delegated), the facility is deemed to be in material compliance with the Clean Water Act. The logic behind this is that, once the government and the facility have agreed upon a set of permit conditions, it would be incongruous for the government to assert that the facility is in violation of the Clean Water Act if the facility is obeying the terms of its permit. Thus, compliance with a permit can act as a “shield” against liability. The Clean Air Act also provides for a “permit82 shield” defense, but it is narrower in scope than the “shield” provided under the Clean Water Act. Compliance with a Clean Air Act permit only shows: (1) compliance with the permit; (2) 83 compliance with provisions above and beyond the ordinary permit requirements if those provisions were included in the permit; and (3) compliance with a provision that the permitting authority determines is not applicable to the permittee and so states in the permit. 84 Statutory and regulatory definitions can also be used as defenses to enforcement actions. In United States v. Self, a defendant was accused of illegally disposing of a hazardous waste when he sold natural gas condensate intended for disposal at a waste treatment facility as automotive fuel. The Court of Appeals for the Tenth Circuit overturned the defendant’s 85 conviction by agreeing with the defendant’s position that “so long as natural gas condensate is burned for energy recovery, it is not a byproduct and, therefore, not a discarded material by virtue of being recycled, and, therefore, not a solid waste, and, therefore, not a hazardous waste under RCRA.” Thus, even though the natural gas condensate exhibited the statutory 86 characteristics of a hazardous waste, the court found that, through an interpretation of RCRA’s statutory definitions, the natural gas condensate could not be considered a hazardous waste. 87 Under CERCLA, a party can avoid liability if the party can show that the release was caused solely by: (1) an act of God; (2) an act of war; or (3) an act or omission of a third party, other than an employee or agent of the defendant or party with whom there is a contractual relationship, as long as the defendant exercised due care and took precautions against foreseeable acts of the third party. While the “act of God” and “act of war” defenses are 88 rarely used successfully, the so-called “third-party” defense is used with greater frequency 89 and success. 90 Copyright © 2011. Government Institutes. All rights reserved. Three well-known versions of the third-party defense are: (1) the Innocent Purchaser defense; (2) the Bona Fide Prospective Purchaser defense; and (3) the Contiguous Property Owner defense. These defenses are intended to encourage the purchase of contaminated or potentially contaminated land. In the past, CERCLA served (unintentionally) to discourage the purchase of such land by holding innocent purchasers and neighbors liable for contamination that they did not cause and were not aware of. These three defenses provide some protection to purchasers of contaminated or potentially contaminated land provided that certain criteria are met. While each of these defenses has its own specific requirements, EPA has issued general guidance on “common elements” that must be met in order to claim one of the defenses. The 91 Steinway, D. M., Ewing, K. A., Case, D. R., Nardi, K. J., & Brownell, W. F. (2011). Environmental law handbook. Government Institutes. Created from erau on 2024-12-11 03:43:29.  elements are: One must perform “all appropriate inquiries” into the property. 92 One must have no affiliation with the person liable for cleanup at the site. One must comply with land use restrictions and institutional controls going forward. One must take reasonable steps to stop continuing releases, prevent future releases, and prevent or limit human, environmental, or natural resource exposure to earlier hazardous substance releases. One must cooperate with, assist, and provide access to persons authorized to conduct response actions at the site. One must comply with information requests and administrative subpoenas. One must provide legally required notices. Effective November 1, 2006, parties wishing to undertake “all appropriate inquiries” are now subject to a new standard and should be mindful of several key points. First, purchasers 93 should ensure that the environmental professional who performs or oversees the due diligence investigation meets all of the qualifications for licensing, education, and relevant work experience required by the new standard. Second, a purchaser may satisfy the standard by relying on a previous inquiry prepared for the purchaser, provided that certain components of the inquiry are updated within the 180 days leading up to the date of the acquisition. Third, the 94 inquiry requirement can be satisfied by a report that has been prepared for another person, provided that, among other things, a similar update is prepared. 95 In sum, the environmental statutes generally establish strict-liability regimes that permit civil enforcement when the bare facts of a transgression are present, without regard for motive, intent, or, for that matter, cause. Nevertheless, several statutes, including those noted briefly above, recognize defenses against enforcement, in certain circumstances. Permit shields, intervening acts of third parties, regulatory definitions, and the like all play a substantial role in the civil enforcement context. As we will explore next, however, the regulated entity can always bargain away its defenses (or add to its affirmative responsibilities) by concluding an agreement with the government. Copyright © 2011. Government Institutes. All rights reserved. 4.5 Agreed-Upon Principles of Enforcement and Defense 4.5.1 Permits The concept of statutory standards of liability and defense (discussed above) is a familiar one. The idea that a law exists, after being passed by the legislature, and that the citizenry is expected to obey that law is a fundamental concept universally recognized. Just as intuitive is the concept of an agreed-upon standard (e.g., a contract). Agreed-upon standards have become a leading source of responsibility and enforcement under the federal environmental laws. As opposed to a statutory standard, which is imposed on the public by the government, an agreed- Steinway, D. M., Ewing, K. A., Case, D. R., Nardi, K. J., & Brownell, W. F. (2011). Environmental law handbook. Government Institutes. Created from erau on 2024-12-11 03:43:29.  upon standard is the product of negotiation between the government and an affected entity. As such, an agreed-upon standard is subject to different considerations and has different implications for the parties involved. The classic agreed-upon standard in federal environmental law is a permit. Permits play a decisive role by providing an approval that overcomes a generally applicable prohibition (consider the Endangered Species Act’s prohibition against a taking). By the same token, they allow the government to tailor environmental requirements to a particular geographical location and a particular permittee in order to achieve a desired result for all involved. Such flexibility allows state and federal agencies to meet certain minimum standards (as required by statute), while also meeting local, site-specific, and private needs. As discussed above (and below), the permit approach also creates new enforcement and liability benefits and concerns. The Clean Water Act’s National Pollution Discharge Elimination System (NPDES) permit is a good example of how this concept works in action. In general, a party must obtain an NPDES permit if it wishes to discharge a pollutant from a point source to waters of the United States. 96 The permit is issued either by EPA or by a state to which EPA has delegated its authority. The 97 permitting authority must, at a minimum, require the facility to meet the federal statutory standards, although a state permitting authority may impose standards that exceed the federal 98 requirements. Typically, a facility will apply for a permit, the governmental authority will 99 issue a draft permit, the facility (and the public) will comment on the permit, and, if agreement can be reached, a final permit will issue. To be sure, the permitting process is not as flexible as private contractual negotiations, and the government has the upper hand, but in practice permittees in good standing have room to negotiate acceptable terms. An issue of key significance with regard to an agreed-upon standard such as a permit is that failure to abide by the terms of the permit is “de facto” noncompliance. The specificity of the 100 permit’s terms, its tailoring to the permittee’s circumstances, and the permit’s detailed enforcement provisions (which supplement the general enforcement terms of the statute) put the permittee in a weak position from which to defend itself against enforcement. For example, the applicability and meaning of the permit’s requirements cannot easily be disputed, since the permittee countersigned the permit. Moreover, the permit may require the permittee to keep detailed records of its regulated operations, thereby ensuring the availability of the information necessary for strong enforcement. That said, the permittee may still assert whatever statutory Copyright © 2011. Government Institutes. All rights reserved. defenses (e.g., upset) have not been waived or revised in the permit. 4.5.2 Consent Orders Another type of agreed-upon standard is the consent order, in which a regulated entity voluntarily agrees to an agency order. The Section 5(e) consent order under TSCA is a useful example. Suppose an importer submits an application to EPA in order to import a new 101 chemical substance into the United States. During its review, EPA determines that there is insufficient information to evaluate the risk posed by the chemical substance, but it concludes that the chemical substance is unlikely to pose a threat to human health and the environment if the circumstances of its importation and use can be controlled. For these circumstances, rather Steinway, D. M., Ewing, K. A., Case, D. R., Nardi, K. J., & Brownell, W. F. (2011). Environmental law handbook. Government Institutes. Created from erau on 2024-12-11 03:43:29.  than prohibiting the importation pending further scientific analysis, EPA has developed the practice of issuing consensual orders under Section 5(e) of TSCA. The consent orders follow a predetermined format, typically limiting the volume and use of the imported substance and sometimes regulating the final disposal of all materials associated with the imported substance. TSCA grants EPA considerable authority to issue unilateral orders to protect human health and the environment, but the very absence of complete risk information would undermine the use of such authority and invite legal challenge. In a word, the unilateral order is too blunt an instrument and is, therefore, rarely used. EPA and the regulated community prefer to use 102 consent orders because they provide flexibility and reliability and because they reduce the chance that the issue will be litigated. 103 4.6 Agency Principles and Policies 4.6.1 Penalty Policies EPA has developed penalty policies to provide guidance to EPA personnel in determining an appropriate penalty to assess against an alleged violator. These policies were developed 104 both to clarify or make more concrete the statutory language and to provide guidance to agency officials in the application of permissible statutory discretion in enforcement. A federal environmental statute typically defines the maximum amount that a party can be fined for a particular violation, but ultimately it is up to the agency to develop its own protocol for deciding when and how to enforce the law. The starting point for the penalty policies is the list of factors identified in the statute as relevant to enforcement. The Clean Water Act, for example, states, “In determining the 105 amount of a civil penalty the court shall consider the seriousness of the violation or violations, the economic benefit (if any) resulting from the violation, any history of such violations, any good-faith efforts to comply with the applicable requirements, the economic impact of the penalty on the violator, and such other matters as justice may require.” 106 Though helpful, a bare list of factors does not amount to a clear, informative, and concrete policy. How much weight should be accorded each factor? How much should a penalty be increased or decreased given a particular set of facts? The text of the statute provides no guidance and, therefore, no predictability. Predictability is not only in the interest of the regulated community: EPA must avoid claims that its enforcement actions are arbitrary and Copyright © 2011. Government Institutes. All rights reserved. capricious. The twenty-five sets of penalty guidelines developed by EPA help to address these issues by expanding on and clarifying the statutory language. EPA has created some overarching penalty policies as well as some statute-specific penalty policies. 107 108 4.6.2 Statute-Specific Penalty Policies While EPA has general civil penalty policies, the statute-specific policies can be of greater help when dealing with a particular statute. The RCRA penalty policy provides a useful example. When assessing a penalty amount, RCRA requires that EPA “take into account the Steinway, D. M., Ewing, K. A., Case, D. R., Nardi, K. J., & Brownell, W. F. (2011). Environmental law handbook. Government Institutes. Created from erau on 2024-12-11 03:43:29.  seriousness of the violation and any good faith efforts to comply with applicable requirements.” EPA has expanded upon this language in its penalty policy, which enumerates 109 a sequence of four steps that EPA personnel are to take when assessing a penalty under RCRA: (1) determine a gravity-based penalty based on a penalty matrix (shown below); (2) add a “multi-day” component, as appropriate; (3) adjust the gravity-based and multi-day components, up or down, for case-specific circumstances; and (4) factor in any economic benefit gained from noncompliance. 110 Under RCRA, the gravity component is based on two factors: (1) the potential for harm, and (2) the extent of deviation from a statutory or regulatory requirement. In order to determine 111